I am currently CEO of the Iclif Leadership & Governance Centre (www.iclif.org) based in Kuala Lumpur, Malaysia, and author of TOO MANY BOSSES, TOO FEW LEADERS (Simon & Schuster, 2011). I have extensive global experience in Leadership Development and coaching senior management teams in their efforts to streamline Business Strategy, Organizational Architecture, and Culture. I have been the Global Chief Learning Officer of Morgan Stanley and The Coca-Cola Company, and has held senior positions at American Express, HSBC, and Goldman Sachs over twenty two years prior to joining Iclif. I earned an MBA from Webster University, Vienna, Austria, and a Bachelor of Commerce from the University of Bombay, India.

The Great Training Robbery: Why the $60 Billion Investment In Leadership Development Is Not Working

If you approve or select your organization’s investments in leadership development, read on….

Thanks to a plethora of research, there is no doubt left about the fact that talent and leadership are essential hallmarks of sustainable business growth. Almost everyone therefore agrees that getting talent and leadership development right is a must. However, despite decades of study, there is little convergence on the best methods of such development. This (the lack of convergence) is surprising because unlike space exploration, the study of leadership is not an evolving science. Unlike most other aspects of human life, the definition of good leadership hasn’t changed over the years. Yes, the context in which leaders operate today is different from 50 years ago, but what followers expect from their leaders in order to be fully motivated has not changed. In fact most leaders agree that it will not change over the next 50 years either. In this ‘steady state’ shouldn’t there be greater agreement about how companies should spend their development dollars for maximum ROI?

I don’t have an answer for the lack of convergence, but would like to offer thoughts on two aspects of leadership development which might help CEOs and Heads of HR in prioritizing their investments. First, I will offer a perspective on the basic question – what makes a leader. There is no shortage of advice and opinion on this question, but I share below what I learned after working for 22 years in Fortune 500 companies in 8 countries. Next, I will comment on development and training methods with the hope of creating some clarity on how to choose the most appropriate investments for your business environment.

What Makes a Leader? Ask a group of executives this question anywhere in the world and you will get exactly the same answers like vision, people skills, compassion, empathy, good values, leading from the front, etc. Based on this knowledge, most development and training efforts focus on building these skills. However, despite billions spent on leadership development each year, we are not succeeding in creating enough leaders in the business world. In my opinion, this is because the list is missing the most important ingredient of leadership. Yes, leadership is about having a vision to create something special, and the ability to get a lot of people behind that vision. But what is often overlooked is the fact that in order to convert the vision into reality, one faces incredible amounts of resistance. Most people give up in the face of such resistance. Only a few are able to find the requisite emotional energy to keep going despite the toughest of obstacles. It is such energy that makes one a leader, not the skills of setting strategy or overseeing execution. And unfortunately, energy cannot be learned in a classroom or acquired automatically upon promotion. It must be self discovered.

Two things must happen simultaneously if you want to discover your leadership energy. One, you must feel deeply about the inadequacies of current reality, and Two, you must decide to do something about it. In other words, you need to be crystal clear about your purpose – the results you want to create, and your values – why and how you will go about it. The moment you declare your intention to create a better future, your constant companion from then onwards will be resistance. Without clarity of purpose and values, it will be impossible to keep going. Real leaders re-energize themselves in the face of obstacles by visualizing their purpose and remembering their values.

So what can companies do about developing leaders. My simple advice is this – Stop investing in formulaic training that teaches copy cat methods in the name of best practice. What makes Jack Welch a leader will not necessarily turn your employees into leaders. Copying someone else’s ‘three-step formula’ for leadership success is an act of followership, not leadership. Instead, focus your company’s training investment on activities and programs that help your employees better understand their purpose and values in life. Most people, including some seemingly “very successful” ones, have not thought through their purpose and values. Yet, this is the basic step towards becoming a leader. Teaching someone how to develop a winning strategy, design an organization, or to execute flawlessly is futile unless he is clear about what he wants out of life and if he even wants to be a leader. I am not saying the skills mentioned here are not important for leaders. It is just that in of themselves (without clarity of purpose and values) they are less effective. There is a clear hierarchy of steps involved in becoming a leader. The first step is developing clarity of purpose and values. Anyone that misses this first step cannot be a leader no matter how smart they might be.

This approach to developing leaders in not without risk. As employees begin to clarify their purpose and values, some may find that they are in the wrong job or wrong company, and may leave. My company runs programs specially designed to help people clarify their purpose and values. Some clients get worried about attrition when they see our programs. One CEO that observed the ‘purpose and values’ part of our program had this to say to me during coffee break, “Rajeev, we hired your company to improve retention, not to drive up attrition. Why are you encouraging my people to leave?” My counter question to him was, “Do you want people whose purpose is something other than the work you want them to do, to stay in your company? Or would you rather have those seats vacant and fill them up with people that want to do such work?” The CEO ultimately saw the logic of my argument, and continues to retain us as a provider of leadership development solutions for his company.

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First of all $60 billion is not the annual figure spent on leadership development training. $60 billion is for all formal training in the U.S.– sales training, customer service training, etc. Also, there’s a reason HR folks look to previous great leaders to train. They’re not trying to create mini-Jack Welch’s. They’re using these examples of leadership to stir thinking so managers and potential leaders can find their own path: http://wp.me/p1irwj-l5

Thanks for your comment. Very thoughtful. Just to clarify, $60 billion is my low side (very conservative) estimate of ‘global’ spend on leadership development. According to the numbers I have seen, the US employee training market across all disciplines is about 135 billion. Agree with your observation about the ability to learn from previous leaders as long as it is what you said – to stir thinking, and not copying.

So where’s the robbery? Who’s stealing the $60 Billion? My imagination saw a dozen CEOs asking their General Counsel if they can swear out a warrant on their Chief Learning Officer.

But not so fast.

I happen to be a terrible gambler. Every once in a while, I get invited to play poker with my friends, and I set a limit – say, $100. If the point were making money, I may as well throw my $100 in the fireplace. But that’s not the point – the poker game becomes a structure for interaction, breaking down barriers, discussion, getting some business done, and building relationship equity.

What’s the ROI on that? If my relationships, my ability to get results by collaborating with others and the climate of my neighborhood get better, that’s worth a lot more to me than $100. Though in the eyes of my accountant, I’m out a C-note.

Here’s where the value is draining away:

It doesn’t matter how great the training, experience, or coaching is. It’s up to executive leadership to put their time where their words are by working to define, expect, coach and reward great leadership.

If you train people to be great but tolerate poor leadership behavior, you’re spending money for nothing. It’s not the training, not the coach, not the mentoring program. Performance management can’t be delegated, and that – lack of follow through – is the main reason training fails. Not because they don’t get paid for it – because they think you’re not serious. And that’s a leadership issue.